WGUl D089l Pre-l Assessmentl (NEWl
2026/l 2027l Update)l Principlesl ofl
Economicsl Review|l Questionsl &l
Answersl |l Gradel A|l 100%l Correctl
(Verifiedl Solutions)
QUESTION
Whichl ofl thel followingl describesl al marketl wherel individualsl andl firmsl arel morel
likelyl tol engagel inl riskyl behaviorl whenl theyl arel protectedl froml facingl thel
costsl ofl thatl behavior?
A.l Adversel Selection
B.l Morall Hazard
C.l Asymmetricl Information
D.l Thinl Market
Answer:
B.l Morall Hazard
QUESTION
Whichl ofl thel followingl describesl al marketl wherel onel partyl inl al transactionl hasl
morel informationl aboutl thel qualityl ofl thel goodl thanl thel otherl party?
A.l Morall Hazard
B.l Adversel Selection
C.l Thinl Market
D.l Asymmetricl Information
Answer:
D.l Asymmetricl Information
,QUESTION
Whichl ofl thel followingl describesl al marketl wherel imperfectl informationl leadsl
somel buyersl andl sellersl tol exitl thel marketl (e.g.l sellersl ofl goodl usedl carsl exitl
leavingl onlyl badl usedl carsl becausel buyersl aren'tl ablel tol bel surel ofl thel qualityl
andl onlyl makel lowl offers)?
A.l Morall Hazard
B.l Adversel Selection
C.l Asymmetricl Information
D.l Thinl Market
Answer:
B.l Adversel Selection
QUESTION
Jeanl needsl al newl winterl coat.l Shel looksl on-linel andl findsl al coatl thatl looksl
perfect.l Thoughl thel pricel seemsl fair,l shel decidesl notl tol purchasel thel coatl
becausel she'sl notl surel itl willl bel warml enough.l Whatl isl causingl thisl inefficientl
marketl outcome?
A.l Morall Hazard
B.l Imperfectl Information
C.l Externall Cost
D.l Adversel Selection
Answer:
B.l Imperfectl Information
Feedback:Imperfectl informationl createsl inefficiencyl inl thel market.l Jeanl optsl notl tol
purchasel al productl thatl wouldl meetl herl needsl b/cl shel isl uncertainl aboutl thel
benefitsl ofl purchasingl thel coat.
QUESTION
Taxesl andl subsidiesl canl bel usedl tol correctl marketl externalities.l Howl shouldl
theyl bel applied?
,A.l Taxl activitiesl withl externall benefits;l subsidizel activitiesl withl externall costs
B.l Taxl activitiesl withl externall costs;l subsidizel activitiesl withl externall benefits
C.l Subsidizel alll externalities
D.l Taxl activitiesl withl imperfectl informationl only
Answer:
B.l Taxl activitiesl withl externall costs;l subsidizel activitiesl withl externall benefits
QUESTION
Someonel buysl thel abandonedl housel nextl tol yoursl andl fixesl itl up.l Thisl
improvesl yourl home'sl value.l Whichl marketl imperfectionl isl thisl anl examplel of?
A.l Externall benefit
B.l Morall hazard
C.l Externall cost
D.l Asymmetricl information
Answer:
A.l Externall benefit
QUESTION
Whatl typel ofl marketl inefficiencyl isl causedl whenl therel isl al negativel externality?
A.l Pricel instability
B.l Underl production
C.l Lossl ofl profits
D.l Overl production
Answer:
D.l Overl production
QUESTION
Whichl ofl thel followingl isl anl implicitl costl ofl production?
A.l wagesl paidl tol workers
, B.l normall profit
C.l purchasesl ofl rawl material
D.l thel electricl bill
Answer:
B.l normall profit
Feedback:Thel businessl ownerl expectsl tol earnl al returnl onl thel entrepreneuriall
effortl theyl putl intol thel business.l Thisl isl knownl asl normall profit.l Therel isl nol
legall requirementl thatl entrepreneuriall effortl bel paid,l sol normall profitl isl notl anl
explicitl cost.l However,l ifl thel ownerl doesl notl receivel al returnl onl theirl effort,l
theyl willl notl stayl inl thel industry.l Thisl makesl normall profitl anl implicitl cost.
QUESTION
Felixl ownsl anl apricotl farml California.l Lastl yearl hel earnedl $73,000l inl totall
revenuel whilel incurringl $13,000l inl explicitl costs.l Hel couldl havel earnedl $60,000l
asl al Humanl Resourcel Specialist.l Thesel arel alll hisl revenuel andl costs.l Whatl isl
Felix'sl accountingl profit?
A.l $13,000
B.l $73,000
C.l $0
D.l $60,000
Answer:
D.l $60,000
Accountingl profitl =l Totall revenuel -l Explicitl costs
73,000-13,000=60,000
QUESTION
Felixl ownsl anl apricotl farml California.l Lastl yearl hel earnedl $73,000l inl totall
revenuel whilel incurringl $13,000l inl explicitl costs.l Hel couldl havel earnedl $60,000l
asl al Humanl Resourcel Specialist.l Thesel arel alll hisl revenuel andl costs.l Whichl ofl
thel followingl isl true?
2026/l 2027l Update)l Principlesl ofl
Economicsl Review|l Questionsl &l
Answersl |l Gradel A|l 100%l Correctl
(Verifiedl Solutions)
QUESTION
Whichl ofl thel followingl describesl al marketl wherel individualsl andl firmsl arel morel
likelyl tol engagel inl riskyl behaviorl whenl theyl arel protectedl froml facingl thel
costsl ofl thatl behavior?
A.l Adversel Selection
B.l Morall Hazard
C.l Asymmetricl Information
D.l Thinl Market
Answer:
B.l Morall Hazard
QUESTION
Whichl ofl thel followingl describesl al marketl wherel onel partyl inl al transactionl hasl
morel informationl aboutl thel qualityl ofl thel goodl thanl thel otherl party?
A.l Morall Hazard
B.l Adversel Selection
C.l Thinl Market
D.l Asymmetricl Information
Answer:
D.l Asymmetricl Information
,QUESTION
Whichl ofl thel followingl describesl al marketl wherel imperfectl informationl leadsl
somel buyersl andl sellersl tol exitl thel marketl (e.g.l sellersl ofl goodl usedl carsl exitl
leavingl onlyl badl usedl carsl becausel buyersl aren'tl ablel tol bel surel ofl thel qualityl
andl onlyl makel lowl offers)?
A.l Morall Hazard
B.l Adversel Selection
C.l Asymmetricl Information
D.l Thinl Market
Answer:
B.l Adversel Selection
QUESTION
Jeanl needsl al newl winterl coat.l Shel looksl on-linel andl findsl al coatl thatl looksl
perfect.l Thoughl thel pricel seemsl fair,l shel decidesl notl tol purchasel thel coatl
becausel she'sl notl surel itl willl bel warml enough.l Whatl isl causingl thisl inefficientl
marketl outcome?
A.l Morall Hazard
B.l Imperfectl Information
C.l Externall Cost
D.l Adversel Selection
Answer:
B.l Imperfectl Information
Feedback:Imperfectl informationl createsl inefficiencyl inl thel market.l Jeanl optsl notl tol
purchasel al productl thatl wouldl meetl herl needsl b/cl shel isl uncertainl aboutl thel
benefitsl ofl purchasingl thel coat.
QUESTION
Taxesl andl subsidiesl canl bel usedl tol correctl marketl externalities.l Howl shouldl
theyl bel applied?
,A.l Taxl activitiesl withl externall benefits;l subsidizel activitiesl withl externall costs
B.l Taxl activitiesl withl externall costs;l subsidizel activitiesl withl externall benefits
C.l Subsidizel alll externalities
D.l Taxl activitiesl withl imperfectl informationl only
Answer:
B.l Taxl activitiesl withl externall costs;l subsidizel activitiesl withl externall benefits
QUESTION
Someonel buysl thel abandonedl housel nextl tol yoursl andl fixesl itl up.l Thisl
improvesl yourl home'sl value.l Whichl marketl imperfectionl isl thisl anl examplel of?
A.l Externall benefit
B.l Morall hazard
C.l Externall cost
D.l Asymmetricl information
Answer:
A.l Externall benefit
QUESTION
Whatl typel ofl marketl inefficiencyl isl causedl whenl therel isl al negativel externality?
A.l Pricel instability
B.l Underl production
C.l Lossl ofl profits
D.l Overl production
Answer:
D.l Overl production
QUESTION
Whichl ofl thel followingl isl anl implicitl costl ofl production?
A.l wagesl paidl tol workers
, B.l normall profit
C.l purchasesl ofl rawl material
D.l thel electricl bill
Answer:
B.l normall profit
Feedback:Thel businessl ownerl expectsl tol earnl al returnl onl thel entrepreneuriall
effortl theyl putl intol thel business.l Thisl isl knownl asl normall profit.l Therel isl nol
legall requirementl thatl entrepreneuriall effortl bel paid,l sol normall profitl isl notl anl
explicitl cost.l However,l ifl thel ownerl doesl notl receivel al returnl onl theirl effort,l
theyl willl notl stayl inl thel industry.l Thisl makesl normall profitl anl implicitl cost.
QUESTION
Felixl ownsl anl apricotl farml California.l Lastl yearl hel earnedl $73,000l inl totall
revenuel whilel incurringl $13,000l inl explicitl costs.l Hel couldl havel earnedl $60,000l
asl al Humanl Resourcel Specialist.l Thesel arel alll hisl revenuel andl costs.l Whatl isl
Felix'sl accountingl profit?
A.l $13,000
B.l $73,000
C.l $0
D.l $60,000
Answer:
D.l $60,000
Accountingl profitl =l Totall revenuel -l Explicitl costs
73,000-13,000=60,000
QUESTION
Felixl ownsl anl apricotl farml California.l Lastl yearl hel earnedl $73,000l inl totall
revenuel whilel incurringl $13,000l inl explicitl costs.l Hel couldl havel earnedl $60,000l
asl al Humanl Resourcel Specialist.l Thesel arel alll hisl revenuel andl costs.l Whichl ofl
thel followingl isl true?
